A federal grand jury here indicted five former employees of Zachry Industrial and three people affiliated with a Houston-area firm Wednesday over allegations they defrauded nearly $11 million from Zachry in mail fraud and kickback schemes.

A corporate fraud task force alleges four then-managers for Zachry, one of San Antonio's largest employers, inflated invoices so the company would pay two principals of Mill & Safety Supply Co. - president David J. Reitman and co-owner Gary Schwing - for items that never were delivered.

Additionally, a fifth Zachry employee, now-former project manager John Tidwell, 54, of Hobe Sound, Fla., is alleged to have wrongly diverted to Reitman and Schwing $100,000 from scrap metal sales that should have gone to Zachry between 2008 and 2010.

In turn, the indictment said, Reitman, 51, and Schwing, 64, gave the former Zachry workers unspecified percentages of the money as kickbacks.

The inflated invoice scheme ran for seven years, from January 2003 to July 2010, according to the indictment, which charges mail fraud, mail fraud conspiracy and conspiracy to launder money.

Zachry Industrial is part of Zachry Holdings Inc, which handles construction, engineering and industrial maintenance services, said a spokesman, Jeff Coyle of KGBTexas.communications.

"The Zachry team uncovered a pattern of filing false invoices for payments on consumables - items such as hardhats, small tools and gloves," Zachry said in a statement. "Following an internal investigation, we turned the results over to federal prosecutors. The amount of the false invoices involved a small fraction of the construction costs of the projects involved, and Zachry customers did not incur any of the losses. Zachry's 12,000 employees are honest and do not tolerate this kind of behavior."

Reitman, reached by phone, declined comment. Calls seeking comment from Schwing were not returned. They, like the other six defendants, were to be summoned to court or allowed to turn themselves in, records show.

"We had great cooperation from Zachry," said special agent Erik Vasys, spokesman for the FBI in San Antonio, which investigated the case with the Internal Revenue Service Criminal Investigation Division. "We thank them for alerting us."

Besides leveling charges, the indictment seeks an order that the government can keep items seized during the probe: vehicles, a Rolex watch, utility trailers, a boat, $20,000 in cash and four properties, including Reitman's $2.5 million home in Houston's posh River Oaks. The indictment also seeks a $10 million judgment against some of the defendants.

Zachry can put in a claim for the seized items and any judgment once the case is complete.

"This case ... is an excellent example of how IRS Criminal Investigation brings its specialized forensic accounting skills to corporate fraud investigations to 'follow the money' and to hold the perpetrators accountable for their actions," said Steve McCollough, the agency's agent in charge in San Antonio.

The indictment said Reitman, Schwing and former Zachry employees Lee Mann, 49, of Hondo; Jason Bardin, 37, of Marlin; Otis Johnson, 42, of LaPorte; and Kenneth Wilson, 45, of Houston, obtained about $10.7 million through the inflated billing scheme.

The workers not only submitted false invoices, but they made entries in Zachry's records to try to cover their tracks, the indictment said.

The indictment said Reitman and Schwing used a shell company, Louisiana Marine and Industrial Supplies, and a tool/equipment company, Constructors Rental & Supply, LLC, to funnel the ill-gotten proceeds and disguise the kickbacks.

Bernardo Rodriguez, 38, of Houston, a Reitman employee, is described in the indictment as a middleman who deposited kickbacks into the accounts of Mann and Bardin.